It's just really hard for me to do anything with this because it feels completely contrary to what I've experienced with this game and others like it. I don't want to discount your experience, but it's really impossible for me to come up with a solution to this when it feels perfect to me and the proposed changes all come with detriments. And I have also had reviews from people who see it my way, so if I were to take this as a democracy, there's still evidence that I should keep it how it is.
If the game used a camera angle like Crimsonland, you'd be too far zoomed out to see your character or the stage, all those promising aesthetics would be out the window. Similarly, I think over-the-shoulder 3rd person cameras don't let you see a lot of your own character, which is the point of this game. If the camera allows you to move toward the edge of the screen before following you, you're not going to be able to see what you're walking into.
(also since you mention Crimsonland, I see that is a swarm-control game, which is not what I want to create. a couple people have mentioned that they expect a twin-stick shooter to be about swarm-control and are confused that Hot Shots isn't, but I think swarm-control is the least interesting thing that can be done with twin-stick controls. I don't want to make something that feels like a twin-stick swarm-control, I want to combine the very versatile twin-stick format with the old arcade games I used to love, like Golden Axe and Donpachi and even Asteroids and NetHack. I want every encounter to feel dangerous. I want it to be hard to handle so that it feels good when you finally get it right.
I realize that being a swarm-control game has nothing to do with how the camera works, but I can't help but wonder if this is indicative of a fundamental difference in expectations to begin with.)
The rigid camera feels good to me, it's everything I've always wanted in a combat camera. I've played many WASD games that use Q/E to control some aspect of motion and I don't have trouble using them in action. The only thing I can imagine you mean by "smoother" is "slower", which is really not what you want in fast moving combat, which is what I want out of this game.
A fixed camera would not allow me to make stages that are as interesting as they are now, as it allows you to explore the stage more. The earlier stages of this game had a fixed camera and they did not feel as good. Being able to rotate the camera makes it feel much more real, like you can actually turn your head.
An automatic camera would change where your gun is aiming, which I think would probably get you killed at some point.
Using a gamepad with twin-stick shooters always makes it harder to aim than using a mouse. I'd like to implement gamepad support at some point as an option, but I would never make it gamepad-only.
I could possibly try using the middle mouse button to move the camera. I don't know mechanically/mathematically how I would make that work.